By Marina Strauss

The threat of competition appears to have spurred Canada’s sole grocery scanning data supplier into improving services – something that could ultimately fatten grocer’s profits, observers say.

Supermarket chains such as Food City, IGA and Sobeys, scrambling to operate more efficiently, have noticed a "marked improvement" in the research and assistance that A.C. Nielsen Co. of Canada Ltd. Has served up in the past year, store officials say.

Some grocery producers, such as Gerber Canada Inc., also point to better data-gathering service from Nielsen.

The improvement comes as rival Information Resources Inc. of Chicago has been trying to break Nielsen’s strangle hold on Canada’s grocery scanning data sector in a bid to enter the estimated $70 – million market.

The dispute has spilled over to an independent federally appointed competition tribunal, which is to resume hearings in Ottawa on April 3 into whether Nielson has an unfair advantage that should be ended.

Federal competition officials launched their investigation into Nielsen’s activities in 1993 following an IRI complaint. Last spring, investigators asked the tribunal to order Nielsen to break its contractual lock on retail chains that prevents them from providing their scanner information to anyone else.

Grocery officials have been keen to tap into IRI because it has had a reputation south of the border for undercutting its fees and catering more carefully to individual clients’ needs.

Steve Buckley, a spokesman for Nielsen in Markham, Ont., denied that service improvements over the past year are tied to the battle of the Bureau of Competition Policy, or to the threat of IRI setting up shop.

Instead, the revamping at Nielsen was sparked by a new boss in Canada, Hugh Latif, who stepped in as general manager 2 ˝ years ago with a mandate to build business, Mr. Buckley said.

Scanners, which read bar codes on packages, are used by chains at checkout counters to track product purchases. The valuable data help grocery officials determine such things as the price levels that prompt sales, items that are popular and those that just sit on the shelves gathering dust.

Industry officials say that they could save hundreds of thousand of dollars by tapping into more "customized" scanner data provided more quickly and efficiently.

For example, if a store is running a particular promotion, the data can point out how big an impact it had on sales, and which promotions are more cost effective.

The independent competition tribunal, which will delve into these issues began hearings last fall but they were cut short by procedural legal wrangling initiated by Nielsen. Late last month the Supreme Court of Canada gave the tribunal a green light to resume its inquiry, effectively rejecting Nielsen’s argument that the bureau’s investigators should release more documents.

But as the legal skirmishing rages on, some grocery officials who have quietly wanted the option of hiring IRI have become increasingly impressed with Nielsen’s improvements.

"Nielsen has become a more service oriented company in the last year," said Tim Carter, a spokesman for Toronto-based Oshawa Group Ltd., whose supermarket include IGA, Food City and Price Chopper.

"I can’t tell you whether it’s due to the threat of a new competitor or because we, Oshawa, have changed in our needs…But we have seen a marked improvement in the service."

The better data service means stronger sales, and ultimately fatter profits, through sharper management of products and their pricing, he said.

For example, in the past six months or so, Nielsen added a second person to the Oshawa Group assignment in Toronto to help with so-called "category management," Mr. Carter said. Category management is considered key to giving retailers an edge by ensuring stores carry just enough products in each category without overlaps.

The grocer was hooked into Nielsen’s data bank directly, allowing it more flexibility to "manipulate their data the way we want to," he said. "Nielsen did not use to be very user-friendly. We used to accommodate their way of thinking and their production of reports."

Patrick Doyle, general manager of the Mississuaga-based Gerber baby food company, said Nielsen had introduced new ideas in the past six months. "They clearly have taken the time to try to customize the package a bit more for us."

Nielsen’s shakeup has included the doubling of staff responsible for category management, adding local personnel in Calgary and Halifax and providing more training, consulting and software development resources Mr. Buckley said."